China’s domestic rebar prices fell sharply on Monday May 24, following drops in futures prices and billet prices over the weekend, on news that China’s National Development and Reform Committee (NDRC) had started a probe into commodity prices, causing mills to go into the red.
Domestic ***
Eastern China (Shanghai): ۴,۹۰۰-۴,۹۲۰ yuan ($762-765) per tonne, down by 200-230 yuan per tonne
The NDRC, along with the Ministry of Industry and Information Technology, State-owned Assets Supervision and Administration Commission, State Administration for Market Regulation and China Securities Regulatory Commission, jointly interviewed major companies in ferrous and base metals industries on Sunday May 23 to investigate the violent price increases seen early this month, according to a NDRC report.
There will be close supervision of spot prices of bulk commodities and its link with futures contracts, the NDRC said.
The interview by five central government offices follows local government interviews regarding price manipulation by large companies. The move shows the Chinese authority’s commitment to curbing abnormal price changes, an industry analyst said.
Billet prices dropped by 250 yuan from Friday to 4,900 yuan per tonne on Sunday in response to the news, before regaining 20 yuan per tonne on Monday.
Rebar prices followed suit in both the futures and spot markets, but the low prices have encouraged more buyers to replenish stocks.
Market chatter ***
“Rebar producers have posted a loss of 150-170 yuan per tonne, against making profit of 250-300 yuan per tonne a week earlier. When the loss worsens or continues for two or three weeks, steel mills will start to cut production,” a second industry analyst said.
Billet ***
As of 3pm, billet was trading at 4,920 yuan per tonne including value-added tax in Tangshan, down by 230 yuan per tonne from last Friday.
Shanghai Futures Exchange ***
The most-traded October rebar futures contract closed at 4,974 yuan per tonne on Monday, down by 138 yuan per tonne from last Friday.
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